Unlocking Financial Integrity in Your Church: Key Practices for Success
In today's world, churches face unique challenges when it comes to financial management and maintaining integrity. This blog explores essential practices to inspire your church to take proactive steps in financial stewardship.
Financial Controls Create a Culture of Accountability
Implementing robust financial controls is essential for churches of all sizes. Practical strategies include the segregation of duties and regular internal audits of processes and procedures to minimize the risk of fraud and mismanagement. Obtaining proper authorization in advance of spending and detailed receipts for expenditures made aid in the effort to create accountability at all levels of the organization.
Regular Reporting Creates a Climate of Transparency
Expecting accurate, timely, and complete financial reports on a regular basis is important for the on-going success of your organization. At a minimum, your leadership team should be reviewing a Statement of Financial Position (aka Balance Sheet) and a Statement of Activity (aka Profit & Loss) on a regular basis. In addition, looking at the Budget vs. Actual report based on current month, year-to-date, and by department can mitigate overspending and prompt engaging conversations.
Understanding Finances Creates a Consensus for Wise Decisions
Understanding the financial position of your organization is more than just seeing numbers on a page. Knowing what those numbers mean is paramount to making wise decisions in the short-term and for the long haul.
When you understand your numbers, you can easily answer questions like:
How are we doing so far this year compared to where we thought we would be?
Do we have enough money in reserves to get us through our slow months?
How much of our bank balance has been earmarked (designated or restricted) by our donors?
Have we set funds aside for deferred maintenance on our facility?
Financial Success Begins with Unlocking Financial Integrity
Creating a climate of accountability and transparency is crucial to building trust within your congregation and protecting the church from potential financial misconduct. Establishing clear financial policies and procedures are critical for every organization, regardless of their size. Understanding your financial reports will aid your leadership team in making beneficial decisions for your organization.
If you have questions regarding these practices or want to learn more, feel free to reach out via our website's contact form at GoodStewardChurchAcademy.com.
